The Commerce Department should add China’s Yangtze Memory Technologies Company to the Entity List because it has “clear ties” to the Chinese military and is helping the country gain ground in the semiconductor industry, two Republican senators told Commerce. Sens. Michael McCaul of Texas and Bill Hagerty of Tennessee said the chip company also should be subject to the foreign direct product rule, which would restrict the company’s ability to import certain foreign-made semiconductor equipment that is built with or that incorporates U.S. technology. “With no [Chinese] firm or alternative foreign provider capable of providing YMTC with comparable equipment and software -- including high aperture etching tools, metrology and inspection tools, and cleaning systems -- a unilateral control” by the U.S. would “significantly hinder YMTC’s ability to implement a [Chinese] industrial plan designed to weaken U.S. national and economic security and increase its reliance on” China, the senators said in a July 12 letter to Commerce Secretary Gina Raimondo.

Export Compliance Daily is providing readers with the top stories for July 6-9 in case you missed them. You can find any article by searching on the title or by clicking on the hyperlinked reference number.

Several U.S. and foreign companies in June and July provided updates to their transactions that require foreign investment reviews and approvals. The deals include a signed national security agreement (NSA) with the Committee on Foreign Investment in the U.S., plans to file joint CFIUS declarations and a stalled purchase involving a South Korean semiconductor company.

A leading semiconductor industry group and a technology foundation are seeking feedback on challenges facing the semiconductor industry as the U.S. government prepares to provide funding and innovation incentives to help chip companies better compete with China (see 2106100028). SEMI and Mitre Engenuity said they want to make sure the government funding is “spent wisely” and “put to optimal use.” Information shared through their survey will be reported publicly in “non-identifiable form.” The survey closes July 20.

Rep. Rick Larsen, a pro-trade Democrat from Washington state, told an audience at the Washington International Trade Association that Congress views China primarily as a strategic competitor, though members recognize there are areas of cooperation as well. He said that 10 years ago, the view from Washington was the reverse.

Taiwan and the U.S. had their first official meeting under the Trade and Investment Framework Agreement since 2016, and Assistant U.S. Trade Representative Terry McCartin praised Taiwan for improving its enforcement of trade secrets protections, and its plan to change its medical device approval process.

The Defense Department June 28 published an unclassified list of entities that qualify as Chinese military companies. DOD is required to publish a list annually through 2030 under the 2021 National Defense Authorization Act. President Joe Biden recently expanded a Trump-era policy that banned investments in Chinese military companies (see 2106030067). The State Department listed the following entities:

A bipartisan group of lawmakers on the Senate Finance Committee introduced a bill last week they say will strengthen semiconductor supply chains by incentivizing more domestic manufacturing. The Facilitating American-Built Semiconductors (FABS) Act, like several similar bills proposed in recent months (see 2106100028), would introduce investment tax credits for investments in semiconductor manufacturing and other incentives for the semiconductor industry, the senators said June 17. An emphasis would be placed on manufacturing of “specialized tooling equipment” required in the semiconductor manufacturing process. Committee Chair Ron Wyden, D-Ore., and top Republican Mike Crapo, R-Idaho, introduced the bill with four other committee members as co-sponsors.

The U.S. and the European Union agreed this week to establish a U.S.-EU Trade and Technology Council, which will feature working groups on emerging technologies, export controls, investment screening and securing semiconductor supply chains, the White House said June 15. The European Commission said the council will meet “periodically” at the political level and will be chaired by EU trade officials along with U.S. Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai. The working groups will “operationalise the political decisions into deliverables” and report to the political level, the commission said.

A Chinese private equity fund manager must obtain approval from the Committee on Foreign Investment in the U.S. before completing its transaction with a South Korean semiconductor company, a June 4 Securities and Exchange Commission filing said. Beijing-based Wise Road Capital and South Korea-based Magnachip Semiconductor, which has offices in the U.S., were told by CFIUS last month to submit a “notice concerning” Wise Road's buy of Magnachip, Magnachip said, which is now “conditioned on the receipt of CFIUS approval.” The two companies plan to file a joint voluntary notice, and Magnachip said it expects the deal's timeline to be delayed. Magnachip added that it doesn’t believe the transaction “will require any approval” in South Korea but plans to cooperate with the South Korean government if it has questions.